Will McKinsey rule Turkey?

As the Turkish government agreed with McKinsey & Company for a new economic program, soL News highlights the role of consultancy firms as the operators of 'roadmaps' and the saviour of capital around the world

The debate on the US-based consulting firm McKinsey & Company's role in Turkey is still continuing. The firm came to an agreement with the Turkish government in late September within the scope of Turkey's 'New Economic Program'.

Insufficient statements from the government have also led to debates and speculations in Turkey. At the same time, one needs to pay attention to the fact that 'consultants' do not function with the same influence and authorities as they are supposed to do so with reference to the definition of the term. Uncovering the so-called "program of crisis" and the "mechanism of recovering capital" is much more important than what McKinsey will do in Turkey.

The expectations on McKinsey's determining role during Turkey's crisis process in such fields as the designation and control of public administration and public resources, the coordination of the ministries, and the readjustment of public employment have led some people to think that the government preferred McKinsey to the IMF.

Turkey's Treasury and Finance Minister Berat Albayrak's statements on the role of McKinsey imply that the American consulting firm will replace the former Ministry of Development that was turned into the Directorate of Strategy and Budgeting.

Yet, it is necessary to see that the role of McKinsey is limited, flexible and less institutional even though some points regarding the comparison with the IMF is right. Doubtlessly, employing a consultant with money rather than cooperating with such institutions, whose tasks and authorities are defined in accordance to the international treaties or national laws, stands for a more "irregular" relation in comparison to any ministerial bureaucrat who is well engaged with the political rule.

Furthermore, there are some unwritten aspects of the capitalist system's "program of crisis", which would never be in a written format properly. For example, although the "restructuring financial debts" is a major element of the program in question as a sort of "operation to recover capital", the government's 'New Economic Program' refers to this element only at one point. It remains highly ambiguous what debt service mechanism has been established or what results would come.

As soL columnist Korkut Boratav underlined, although the Turkish government did not prefer the IMF, it can be argued that the mechanism has also been formed to transfer the foreign debt from the private sector to the public sector, and that the "credibility" of Turkey's Treasury will be further used while seeking for new foreign resources in the upcoming period, showing that a little bit more complicated and indirect mechanism than the IMF will be established at the expense of a public sector-based indebtedness.

THE AKP GOVERNMENT'S PAST OF CONSULTANCY

So, what will McKinsey do? It is possible to ask this question for the "works" that were carried out by dozens of consultants, including McKinsey, within the public institutions after they were employed during the rule of Justice and Development Party (AKP) government. Or, the question could be expanded: what good is this institution of consultancy in general fields, including the private sector?

The AKP government has ruled Turkey for the last 16 years with imperialist organizations and several consultants who are subcontractors of such organizations. Some organizations like the World Bank and the IMF or the international consulting firms, most of which are based in the US or the UK, have drawn the "road map" for deciding how and what fields and institutions would be privatized, the role of the institutions in this process, and how the process would continue in the case of entire privatizations that amounted nearly to $150 billion, as well as the commercialization of such fields as energy, health and education valuing $60 billion, during the rule of AKP government.

The government cooperated with various "strategy consultants" as the same process witnessed the privatization of public banks and the Turkish Airlines under the pretext of the public offering, and the ministries were restructured. In direction of the international capital, these consulting firms received millions of dollar while "marketing" the related institutions, fields and sectors very rapidly.

So, what did these consulting firms do? They freehandedly used all resources of the institutions they engaged, they resold many things to foundation organizations for bigger prices, they always drew "roadmaps" for commercializing and privatizing the related fields and institutions despite huge and irreparable losses.

Among all such firms, McKinsey has the biggest business volume both in Turkey and the world. Having been involved in the Enron scandal, a big corruption case in the US in the early 2000s, McKinsey advised the privatization process of electricity distribution in 2004 in Turkey. They shaped all the aspects of the process, including the number of distribution centres, and the procedures for the privatization model. What is left from this consultancy are some sunk companies of electricity distribution with the highest proportion in the private sector debts.

It is estimated that the consultants received at least $10 billion during the rule of the AKP government. Already received the lion's share from the cake, today McKinsey has attempted to coordinate the existing conditions of Turkey through the AKP party's "crisis mechanism" to save the capitalists, while restructuring the state administration that has been undermined due to the presidential government system in Turkey.

THE WORLD OF CONSULTANCY

It is estimated that the volume of the worldwide consultancy market is around $250 to 300 billion. Out of all the five main segments (strategy, purchasing/merging operations, financial consultancy, human resources and technology, the biggest segment is the financial consultancy and purchasing/merging operations. According to data from 2016, 28 percent of total consultancy revenues came from purchasing/merging operations, while 28 percent from financial consultancy, 20 from technology, 12 from human resources, and 12 from strategy.

The biggest segment, purchasing/merging operations, is composed of privatizations, sales of companies and assets, and consultancy for merging companies. It is stated that 48 percent of consultancy business is from North America, 41 percent from Europe and the Middle East countries, and 16 percent from the Asia-Pacific countries.

Accenture, Bain & Company, Boston Consulting Group (BCG), Booz Allen Hamilton, Deloitte, Ernst & Young (EY), KPMG, McKinsey & Company, Mercer, PricewaterhouseCoopers (PWC) are listed as the ten biggest consultancy firms in the world. With $210 billion, these ten companies nearly employ the three-quarter of worldwide consultancy market. As PwC, Deloitte, KPMG and EY are "the biggest four", McKinsey and some others are more based on strategy and human resources, with less turnover and fewer employees.

Consultancy firms function in direction of the frame of international finance and technology monopolies, and operate in the field of standardization, information transfer and control. The major operators of the downsizing of the state, the transformation of the public, and the readjustment of companies with the needs of the "market" have been the consultancy firms for the last three to four decades.

As these firms had worked mainly within the private sector in the past, they came to the fore with the role of public consultancy in the severe privatization processes during the capitalist restoration of former socialist countries following the dissolution of the socialist system.

THE WORLD OF READY MODELS AND PATTERNS

The world of consultancy acts with ready models and patterns for each work from the valuation of assets to restructuring of a company. Standardization is doubtlessly one of the main reasons for this choice in direction of the tendencies of international capital, as it also helps the costs of consultancy be at minimum level.

For instance, electricity consumption trends are collected from any economist who lives in New York or London in the case of a privatization process of electricity distribution in Turkey. Of course, the data collected by the Turkish energy ministry and electricity institutions, the models and works in this field are also provided for such experts. Although a general model or pattern is preferred, which can be applied everywhere in the world, so as to maximize the capitalistic profits, such models could also lead to huge loses anytime, anywhere...